Anthony Kennedy Hinted at How to Save Obamacare—But Will the Supreme Court Listen?

March 4, 2015

Attempting to divine outcomes from Supreme Court oral arguments is a foolish endeavor. But in a promising sign for supporters of the Affordable Care Act, one of the Court’s conservative justices—Anthony Kennedy—traced a path along which he could find for the government in King v. Burwell, and uphold health insurance subsidies in 34 states.

“There’s something very powerful to the point that if your argument is accepted … [it's hard to see how] this is not coercion,” Kennedy said to the plaintiffs’ attorney, Michael Carvin. “Court and counsel for both sides should confront the proposition that your argument creates a serious constitutional question.”

Kennedy’s point was that reading the ACA to condition subsidies on states establishing their own exchanges, and to impose an unworkable regulatory framework—a insurance market “death spiral”—on states that do not comply, might be unconstitutional. He compared it to the idea of coercing states to build highways by threatening to impose a 35 mile per hour speed limit if they refuse. “We wouldn't allow that,” he said.

Kennedy didn't fully close the door on simply deeming the law unconstitutional once again, as he did in 2012. But In a later exchange with the government’s advocate, Solicitor General Don Verrilli, Kennedy suggested sua sponte that "if Petitioners' argument is correct, this is just not a rational choice for the States to make and that they're being coerced. And that you then have to invoke the standard of constitutional avoidance.”

Back in November, I argued that Chief Justice John Roberts could treat this case with the same dexterity he used to uphold Obamacare in 2012 by citing constitutional concerns with the challengers’ interpretation of the law. Kennedy, not Roberts, raised those very concerns.

At a separate point, Kennedy told Carvin, “It may well be that you're correct as to these words, and there's nothing we can do.” So it’s unclear precisely which direction his coercion concerns cut, or whether they’re strong enough to overwhelm his inclination to vouchsafe the challengers’ textual argument. But his explicit suggestion that the challengers have proposed an unconstitutional reading of the statute, and his apparent aversion to trespassing into thorny constitutional territory, is crucial to the law’s survival as implemented. The four liberal justices hounded Carvin for 40 minutes, with occasionally incredulous questions, suggesting that they are disposed to upholding the subsidies in states that didn’t set up their own exchanges. Justice Elena Kagan derided the "never-ending saga" of Obamacare litigation. But they will need a fifth member to carry the day.

As is his custom, Justice Clarence Thomas asked no questions, and Roberts was unusually silent as well, betraying no hint, as he did in 2012, of his leanings in this case. Justices Antonin Scalia and Samuel Alito once again had their knives out for Obamacare. The two men peppered Verrilli with skeptical questions, and bailed Carvin out multiple times when he ran up against tough questioning from liberal justices. Both sought to defuse the concerns Kennedy raised—Alito by suggesting states might respond to a ruling for the plaintiffs by setting up their own exchanges, Scalia by suggesting Congress might step in.

“You really think Congress is just going to sit there while all these disastrous consequences ensue,” Scalia asked.

“This Congress?!” Verrilli responded, to laughter.

Scalia likewise invoked the argument, common in conservative media, that the ACA drafters imposed conditions on the subsidies to secure a crucial vote from then-Senator Ben Nelson. Verrilli dispensed with that argument, saying “there is objective proof that that is not true.” Not discouraged, Scalia insisted that even "if the only reasonable interpretation of a particular provision produces consequences" it's not for the Court to "twist words as necessary" to make sense of the law. "That can't be the rule."

The Court and attorneys seemed to resolve the question of plaintiff standing, suggesting that the justices will decide the case on the merits. In an inconsequential but revealing and humorous moment, Carvin argued for a client’s standing by referring sarcastically to “the usual clarity of the IRS code.” His entire case is premised on the notion that a section of the IRS code is clear and unambiguous and does not allow subsidies in states that haven’t established their own exchanges.

This article has been updated.

Brian Beutler is a senior editor at The New Republic. He hosts Primary Concerns, a podcast about politics.